I Think Tesla Has Their Attention

Tesla “stuck their finger in the ground and turned the whole world around”.

We initially wanted to have this article be about the reluctant acceptance to the reality that electric vehicles are here to stay. They are gaining acceptance and recognition daily as something that should be in the discussion of future transportation choices. But the more I thought about this subject and my own personal experiences; I realized this story is really about one company in particular that is causing a paradigm shift in consciousness.

GM’s early EV1

Over the past few years there has been a conscious effort to introduce pure electric vehicles into the marketplace. The

reasons have been based on lowering our dependence on fossil fuels to reducing green house gases.

We’ve made several pushes only to not have the seemingly right product available. Even if we had a product that seemed to be what we needed, it wasn’t what we wanted and we pushed back.

Well, a small independent startup company in California that wasn’t even an automotive manufacturer offspring seems to have solved the puzzle. Tesla Motors has taken the world by storm.

This story is about the apparent shift in thinking not only by consumers, but also by the automotive establishment. It’s not a done deal yet, but I truly feel Tesla Motors finally has everyone’s attention.

But first, think back for a moment. It wasn’t so long ago that manufacturers started trying to develop their own solution to the need for an electric vehicle. Even if it was just to be able to check the box in their portfolio. Even though each manufacturer had their team of established experts and engineers working on solutions of how to best bring an electric vehicle to market, they all were somewhat similar in their limitations and design.

It appears evident that most manufacturers were so concentrated on maintaining what was making them money (internal combustion engines -ICEs) that they could only provide an effort to develop an pure electric vehicle (EV) that was heavy handed and not very efficient. With all the engineering know-how you’d think they could invent a power unit that could provide what people want.

I applaud the brain trust of Tesla Motors for being bold enough to start with a clean sheet approach to creating a new vehicle that meets our demands unlike any other EV on the market. Here’s how I see Tesla’s approach and why it follows a brilliant business model that isn’t for everyone, but it’s working. This is evidenced by the negative attention other manufacturers and their minions have tried to apply to them.

High-tech isn’t always cheap. Don’t try to make it affordable for everyone. The good stuff generally costs more anyway. Don’t be ashamed or apologize. Make profits while you increase capacity to eventually lower costs.

Exceed expectations. If everyone else can go 40-50 miles on a charge, you go over 200 miles on a charge.

Make it beautiful. Not everyone eats red meat. Some are vegetarians while some diet in other ways. But everyone likes candy.

What Tesla has done is simply provide the best package for making a case for electric vehicles. As you might know, my own evolution into EVs started when I spent some time in BMW’s new i3. I absolutely love this vehicle. Their “born electric” mantra fits. They started from the ground up to solve some EV shortcomings and have succeeded.

Tesla is in a different league however than any other manufacturer. I think the fact that they are the little guy who is doing things totally different has ruffled some feathers. The media has fought to bring up any perceived flaw in their vehicles. Every time a Tesla was involved in an accident and caught fire, it made the news even though there were no injuries. It seemed the press was trying to discredit them into being considered unsafe. True car people know that under the same circumstances ANY vehicle would more than likely have caught fire. In fact it probably would have been worse since in an ICE you would have been carrying a tank full of explosive fuel.

Even though the road debris that cause the issue was rare, Tesla came up with a solution to greatly reduce any possibility of this happening again. This fix was applied to the entire fleet. Bonus points for quick action, response and resolution of a manufactured press event.

We’ve even noticed that the press is looking for any story line to suggest Tesla cannot maintain its appeal because the only reason people were buying it was due to the higher cost of gasoline. Now that crude oil prices have fallen, they are predicting doom for future orders. This is also an illusion as though the Model S is an electric vehicle, it is perceived as a great sport luxury vehicle that happens to be electric. The price of gasoline will not adversely affect sales to the point of harm.

Lately the press has tried to hurt Tesla sales by promoting any story about the reported high cost of collision repairs for the Model S. We know these costs are exaggerated and extreme examples of the market. But you could easily compare the price of repairing any high-end vehicle with an aluminum body and special needs with an occasional higher repair cost.

The last swipe at Tesla’s image or business model that we’ll mention comes from the regional governments. A handful of states including Michigan where we are based have enacted or toughened laws preventing Tesla from selling vehicles within their state. Tesla is a “silicone valley” type company with new and efficient ways of doing things. They realized the best way to sell their product is online and not burdened by a large dealer network. This is not to knock franchised dealerships, because they are fine and serve a purpose. But if you can do the same thing closer to the chest and control the process by going online thereby being much more efficient, why not?

Well, we wonder what’s behind the decisions to deny Tesla the opportunity to sell within certain state borders just because they don’t have franchised dealerships. I know in my case Michigan HEAVILY depends on the sales, employment and manufacturing capabilities of the Big Three auto manufacturers. I’m sure they have some lobbyists talking behind closed doors.

So its obvious Tesla has shaken the tree in the industry. In the midst of all the fog and shots it’s taken, they are even more relevant. The word is getting out that a small company is doing things better in many respects than the established companies. This is before we mention the public awareness of the “insane” performance of the Model S P85D or the Model X.

Since late last year, I’ve noticed that there are quite a few news releases about the competing manufacturers coming out with cars to compete directly with Tesla. This shift in the market means they realize that the competition cannot beat them with their current crop of competitor vehicles. They have to jump in and go back to the drawing board to come up with a suitable Tesla alternative.

This is not bad for the market. Even Elon Musk (Tesla CEO and chief product architect) agrees, the more electric vehicles in the market, the better. It only helps the general public gain acceptance of the concept. Everyone is a winner.

As I’ve admitted, the BMW i3 has helped me evolve into someone that now understands the viability of owning a purely electric vehicle. It helped resolve most any concerns or perceptions I had of EVs. In fact once I got back into my ICE, I couldn’t get past the sheer inefficiency of it. The light bulb came on above my head. I understood where we should be going or at least not fighting against it.

But then there’s the other side of the Tesla business model that is breaking the automotive mold. These are the main points that are long lasting even if the price of gasoline falls to the point where the benefit of electricity is negligible (though I doubt that will ever happen).

Personally I love the fact that once you buy a Tesla, you are continuously getting a new vehicle via software updates. Your vehicle is so heavily controlled by ingenious software that you automatically get updates to provide with few exceptions the same benefits of a brand new model. So unless its hardware dependent a 2014 Model S will be automatically updated to the same operating level as a 2015 Model S. You essentially have a car that evolves as the organization develops new options and advances in technology. Did I mention this is for the life of the car? Free?

Tesla Supercharger

How would you like to run your vehicle for free? Yes electricity isn’t free. Every time you charge your vehicle at home, it cost something, albeit pennies. Well Tesla has its own worldwide network of Superchargers where you can charge your vehicle faster than anything else can…for free and for the life of the vehicle.

People have mentioned the price of the Model S is too high. Yes it’s not cheap, but you have to understand the business model. It works. It is common business pricing strategy to determine the perfect selling price of a product by its demand. If you have a surplus of product, your price is too high. If your demand is much greater than your supply, you can raise your price until it balances supply vs. demand. It’s simple Supply vs. Demand Equilibrium Pricing because at this point in Tesla’s history they can’t build cars fast enough. The price is fine.

At this point I’d like to admit something. I made a terrible mistake recently while in Las Vegas. I test-drove a Model S. This was a mistake because now I have a tendency to compare subsequent vehicles to the Model S, which isn’t fair. I’ll detail it in an upcoming article, but I understand the hype. I now understand why Consumer Reports rated the Model S higher than most any vehicle they’ve rated. It’s still rated as the best overall vehicle.

In closing, the Nissan Leaf and Toyota Prius made the first push for pure EVs in the market recently. Now Tesla and BMW are helping with the next push of EV awareness and acceptance. Tesla and other EVs have always had an uphill climb to overcome public perceptions. Heck, I had my own. But my time with a Model S took care of that.

The public always knew about EVs but never took them seriously. They always had a list of concerns for every advantage an EV had. I’m sure you’ve heard them…the “yeah but…” responses. I’ll close with a few of them and how in my eyes Tesla has rendered them foolish.

Yeah but, you can’t go very far on electric power alone: Wrong! Tesla Model S can go over twice the distance on electric alone as the next best pure electric car. In fact its range approaches what you would have in a typical gasoline powered vehicle.

Yeah but, you might get stranded because you can’t charge them everywhere: Wrong! There is an ever-growing network of public charging stations available across the country. This is not to mention the Tesla Supercharger Network strategically located across the globe. Besides, how would you like the convenience of filling your car up each night at home, while you sleep? You can’t do this with a gasoline vehicle, but you can with an EV. Did I mention you could do this for pennies?

Yeah but, it takes hours and hours to get a decent charge: With the exclusive Tesla Superchargers, you can charge your car in as little as 20 minutes. Did I mention this is free?

Yeah but, it’s a new company and the cars break down often: Wrong again. True this is a new company, but their vehicles don’t break down any more than other vehicles. In fact probably less since they have far fewer moving, mechanical parts.

Yeah but, it costs too much: At this time Tesla Model S is positioned as a luxury vehicle. It is on par with other vehicles in its market. Yet it offers advantages they don’t.

Yeah but, they aren’t very safe: Definitely Wrong. Because of its construction, the Model S is one of the safest vehicles on the market. Its battery pack makes this vehicle strong and safer than most any other vehicle. Refer to Consumer Reports testing.

Yeah but, they catch on fire often: Wrong! Don’t believe the hype or hysteria promoted by competitors. Teslas do not catch fire more than any other vehicle. In fact they may be safer because they do not contain a tank load of flammable liquid.

Yeah but, electric cars are generally ugly: You obviously haven’t seen a Model S have you?